Compliance Examinations

Municipal broker-dealers are required to pass a compliance examination periodically to certify compliance with applicable rules and laws. The exam is designed to protect the public interest, investors, and municipal entities by ensuring compliance with MSRB and SEC rules and with relevant provisions of the Exchange Act.

Under the 1934 Act, the exam may be administered by a registered securities association for its members, an appropriate regulatory agency for all other municipal securities dealers, or the SEC for municipal advisors. All non-bank municipal securities broker-dealers must be registered with FINRA, which will administer their compliance examinations. Bank dealers are registered with the SEC but not with FINRA. Their compliance exams are administered by various federal bank regulators.

The examination typically involves an individual or group of individuals visiting the broker-dealer to examine, on site, the firm’s compliance procedures. Exams are usually required once every two years for